COVID-19 ACCELERATES DIGITAL TRANSFORMATION IN PH

As the pandemic continues to create uncertainty for all kinds of organizations, a global tech company tells business leaders: Make digital transformation your top priority now.

“Digital transformation is no longer just part of a future direction or a nice-to-have—it has now become an imperative,” says Eduardo Bonoan, senior general manager and marketing head at Epson Philippines. “The outbreak [has] highlighted the value of digital solutions.”

Small and medium-sized enterprises (SMES), specifically, need to “rethink, embrace and accelerate” digital transformation, instead of putting their plans “in the back burner,” Bonoan adds.

“At this stage, investing in online collaboration tools for video conferences, email and cloud-based tech solutions should be part of the focus for SMES. Before the pandemic, building trust in business meant meeting your clients face-to-face, but current times force us to create and nurture business relationships virtually,” he says. “SMES must be prepared to reconnect to the market digitally and ensure that relationships will remain strong despite the new paradigm to emerge from this pandemic more competitive.”

It’s a good thing, then, that eight out of 10 SMES in the Philippines already see the value of digital technology, especially when it comes to improving their business performance and customer experience, according to the Epson report “SMES striving for Digital Transformation Amidst Many Hurdles.” The report details results of the Epson-commissioned survey, conducted by Intuit Research, of over 800 SME decision makers in the six largest Association of Southeast Asian Nations (Asean) countries by gross domestic product (the Philippines, which had 154 respondents; Indonesia; Thailand; Malaysia; Singapore; and Vietnam), which tackles their perspective on technology adoption, the maturity stage of digital transformation efforts, and the challenges facing such businesses.

Comparing the Philippines’ numbers to the Asean average, the awareness on and adoption of digital tech appears to be higher in the country. Overall, 80 percent of SMES in Asia are aware of digital transformation as a concept (as opposed to the Philippines’ 86 percent); when it comes to adoption, that number is at 55 percent overall, while 74 percent of Filipino SMES said they had started digitizing their processes, focusing efforts mainly on marketing and sales, as well as customer interaction and servicing.

“This survey highlights the tremendous interest that SMES in the Philippines have in using technology to improve business functions, especially in areas impacting the customer,” says Bonoan.

The report also says that more than half of Filipino respondents (51 percent) have been able to make business decisions quicker through the use of digital technology. Such tech, Bonoan says, include point-of-sale (POS) terminals connected to back end or cloud accounting systems, which allow leaders “to make decisions on a post-daily basis, as opposed to monthly or quarterly, or evenly yearly basis.”

As a printing solutions provider, Epson also looked at SMES’ use of printers for their digital transformation, and found that respondents identified large-format printers as a helpful tool. According to the report, across all six markets, 74 percent and 78 percent of SME owners identified, respectively, “ease of use and printing” and “needing less water and color” as the top factors that motivate them to use large-scale printing technology instead of analog.

Filipinos, however, looked for a particular element when it comes to printers: environmental impact. According to the report, 76 percent of SMES in the Philippines took such factor into consideration, higher than the Asean average of 69 percent.

But while Asean companies are keen on adopting digital technology, there are still critical barriers preventing them from doing so. The top barrier for all six markets is the upfront cost of new tools and technology (63 percent), followed by lack of knowledge and skill sets within the organization (51 percent).

In the Philippines, aside from the two aforementioned issues, replacing old processes and systems (60 percent), and security and customer data leaks (52 percent) are also big challenges for SMES.

“Although SMES in the country have generally begun to adopt digital technologies, more work is needed to help and encourage these companies to extend digital technologies further beyond customer-facing areas of the business.”

Industry-wise, the report identifies manufacturing as the one that needs a stronger ecosystem for digital transformation, stating that it is still in the Industry 2.0 phase, whereas others are already in Industry 4.0.

“Between 8 percent and 10 percent of SMES have deployed some form of robotics solutions in their manufacturing facilities, but a large chunk of SMES in manufacturing sector in region are still heavily human labor-oriented,” the report says. Again, cost is identified as the biggest hurdle to deploying such tech (79 percent).

If SMES are to accelerate their digital transformation— as Bonoan recommends, given the restrictions imposed by quarantines amid the pandemic—then, according to the report, government support is critical. The survey reveals that 55 percent of Asean SMES see digital transformation succeeding if government provides some form of support, such as tax benefits or the cultivation of “right ecosystem.”

“Fostering digital transformation today requires more than the adoption of new technologies. It means creating environments where businesses can leverage innovation to deliver meaningful change that drives positive business outcomes,” Bonoan says. “With SMES at the heart of the economy, they need to be empowered with the right tools to tackle the next steps towards being a sustainable business.”